Data source: Federal Reserve Bank of St. Louis
The U.S. economy has seemingly lost the ability it once had to generate new jobs as it grows. As the chart above shows, from the end of World War II to the end of the 20th Century, rising gross domestic product was mirrored by rising numbers of jobs. GDP growth gradually outpaced jobs growth because of productivity gains. From the start of the 1980s, the IT revolution significantly accelerated those productivity gains, but overall job numbers still kept growing.
At the beginning of this century that stopped. The U.S. economy kept expanding until it hit the global financial crisis in 2008, but job growth plateaued. Even after GDP started expanding again, job growth remained relatively flat. The U.S. economy is now almost a quarter larger in real terms than it was in 2000, but only 3% more Americans are employed. And while GDP is now more than 3% larger than its pre-Great Recession peak, jobs are still 2 million shy of recovering theirs. The reason why is the great dilemma baffling policymakers.
